Ashford Hospitality Trust (NYSE: AHT) and Ashford Hospitality Prime (NYSE:AHP) are both small-cap finance companies, but which is the superior investment? We will contrast the two businesses based on the strength of their profitability, institutional ownership, valuation, earnings, dividends, risk and analyst recommendations.

Risk and Volatility

Ashford Hospitality Trust has a beta of 1.48, meaning that its share price is 48% more volatile than the S&P 500. Comparatively, Ashford Hospitality Prime has a beta of 1.17, meaning that its share price is 17% more volatile than the S&P 500.

Dividends

Ashford Hospitality Trust pays an annual dividend of $0.48 per share and has a dividend yield of 6.8%. Ashford Hospitality Prime pays an annual dividend of $0.64 per share and has a dividend yield of 6.3%. Ashford Hospitality Trust pays out -35.8% of its earnings in the form of a dividend. Ashford Hospitality Prime pays out 177.8% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. Ashford Hospitality Prime has raised its dividend for 2 consecutive years. Ashford Hospitality Trust is clearly the better dividend stock, given its higher yield and lower payout ratio.

Profitability

This table compares Ashford Hospitality Trust and Ashford Hospitality Prime’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Ashford Hospitality Trust -5.43% -10.41% -1.64%
Ashford Hospitality Prime 4.02% 4.88% 1.20%

Earnings and Valuation

This table compares Ashford Hospitality Trust and Ashford Hospitality Prime’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Ashford Hospitality Trust $1.45 billion 0.48 $394.52 million ($1.34) -5.30
Ashford Hospitality Prime $407.02 million 0.79 $100.67 million $0.36 28.39

Ashford Hospitality Trust has higher revenue and earnings than Ashford Hospitality Prime. Ashford Hospitality Trust is trading at a lower price-to-earnings ratio than Ashford Hospitality Prime, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Ashford Hospitality Trust and Ashford Hospitality Prime, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Ashford Hospitality Trust 0 3 3 0 2.50
Ashford Hospitality Prime 0 3 3 0 2.50

Ashford Hospitality Trust currently has a consensus price target of $7.46, suggesting a potential upside of 5.05%. Ashford Hospitality Prime has a consensus price target of $13.40, suggesting a potential upside of 31.12%. Given Ashford Hospitality Prime’s higher possible upside, analysts plainly believe Ashford Hospitality Prime is more favorable than Ashford Hospitality Trust.

Institutional and Insider Ownership

70.2% of Ashford Hospitality Trust shares are held by institutional investors. Comparatively, 69.4% of Ashford Hospitality Prime shares are held by institutional investors. 18.2% of Ashford Hospitality Trust shares are held by insiders. Comparatively, 10.0% of Ashford Hospitality Prime shares are held by insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Summary

Ashford Hospitality Prime beats Ashford Hospitality Trust on 8 of the 15 factors compared between the two stocks.

About Ashford Hospitality Trust

Ashford Hospitality Trust, Inc. is an externally-advised real estate investment trust (REIT). The Company is focused on investing in the hospitality industry with a focus on full-service upscale and upper-upscale hotels in the United States. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership (Ashford Trust OP), its operating partnership. The Company’s portfolio consists of 121 properties with over 25000 rooms; 86 hotel condominium units at WorldQuest Resort in Orlando, Florida; a 96.6% ownership in Ashford Quantitative Alternatives (U.S.), LP (the AQUA U.S. Fund); a 29.7% ownership in Ashford Inc., and a 13.3% ownership in OpenKey.

About Ashford Hospitality Prime

Ashford Hospitality Prime, Inc. invests in high revenue per available room (RevPAR), luxury hotels and resorts. The Company conducts its business and owns all of its assets through its operating partnership, Ashford Hospitality Prime Limited Partnership (Ashford Prime OP). The Company operates in the direct hotel investment segment of the hotel lodging industry. As of February 24, 2017, it owned interests in 11 hotel properties in six states, the District of Columbia and St. Thomas, the United States Virgin Islands with 3,702 total rooms, or 3,467 net rooms, excluding those attributable to its joint venture partner. The hotel properties in its portfolio are mainly located in the Unites States urban markets. The Company owns nine of its hotel properties directly, and the remaining two hotel properties through an investment in a majority-owned consolidated entity. All of the hotels in the Company’s portfolio are asset-managed by Ashford Hospitality Advisors LLC.

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